Energy Manager March 2022

Page 8

OPINION

OFGEM –FIT FOR PURPOSE? Roger Low, FEMA MEI Chartered Energy Manager, Consultant Energy Manager, Speedwell Energy Services

WHAT IS OFGEM’S PURPOSE?

APPOINTMENTS

It’s a question that nobody seems to have asked since it’s inception as an organisation. It’s had multiple parents, DTI, Department of Energy, DECC and now BEIS; and it covers multiple energy related laws and Government policies, some of which are contradictory. It supposedly is meant to protect energy consumers, but it has manifestly failed in that regard. Energy prices keep going up, even when the fuel prices are going down, a badly thought out and poorly set up smart meter programme that is slowly turning into a car crash of epic proportions and the fact that as a country we are now a net importer of energy.

The Directors and governing body could be recruited via open competition similar to the civil service, rather than appointment by cabinet office, reviewed and confirmed by the select committee and with the members given a guaranteed contract term to prevent political interference by affecting career paths. The new body and staff to have mandated tasks and targets set by parliament via legislation, and the directors and governing body answerable to a parliamentary select committee. The need to ensure that the directors are technically competent could be embedded in the legislation, via requiring them to belong to a recognised energy institute or association, to enable them to work with the energy companies from a position of industry knowledge. This would allow them to deal with the energy companies, without issues on jargon or practice; and to prevent industry influencing them, exclude anyone from applying for the posts if they have worked for the big six, and preclude them from ever working for them in the future, so that they have nothing to gain by colluding with the companies.

WHAT IS NEEDED? The body is controlled by Government via appointed directors and cabinet office policy, making it a politically influenced organisation, which due to past and present government’s policy of regulation reduction in some parts and poorly thought out laws in others, and intermittent meddling, is guided by political expediency rather than technical need. The most obvious thing would be to put the organisation on the same level and arrangement as the Bank of England, with an independent governing body answerable to a parliamentary select committee, removing political affiliations and influence; this would also make things simpler for Government by reducing their need to maintain the body as it could be funded by a levy on the energy suppliers and transmission bodies, and reducing their need to officiate over regulations. The new OFGEM would be established by legislation, similar to the Health and Safety Act, which permits one law to run multiple regulations, so that all of the varied energy related laws could be amalgamated into this single act as regulations. Simplification of the laws and regulations, less red tape and a single body to administer them in the most efficient manner - which seems to meet the present Government’s publicly stated policy. The new OFGEM could work to mandates established under the act and deliver them in the way they feel is the most efficient, cost effective and technically desirable, I also include under this the nuclear energy programme, as this has been politically driven from the start with costly and unnecessary consequences.

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MANDATES These should be established by parliamentary act, and reviewed by the select committee as needed, such as ensuring the lowest possible energy pricing for consumers whilst meeting the financial need to maintain and upgrade energy supplies, meet emission reduction targets agreed under treaty, and develop a sustainable and as much as is feasibly possible self-supplied resource to reduce the impact of international prices and conflicts on national needs. At the end of the day, the new OFGEM and enabling act and regulations would be geared to deliver a sound and sustainable energy supply to the country, which is technically, environmentally and financially sustainable with an emphasis on future need. And to answer what is wrong with the present system, I will list a few things: Smart meter roll out, £11 billion, and has delivered less than half of its target to date, with serious issues over the technology, which the SMETS2 roll out is attempting to rectify. The new nuclear programme, long overdue, massively overpriced, economically unviable, environmentally unsupportable; and with the rapid development of renewables,

ENERGY MANAGER MAGAZINE • MARCH 2022

storage and more energy efficient systems, rapidly becoming redundant before a single kilowatt has been generated. Made worse by the fact that the Hinckley C design has issues, like not working, the EdF site at Flammanville, the Finnish site, both not working, and the only working one at the Chinese site of Taishan has had an explosion and is out of action. Would the Hinckley C project have got past a politically independent and technically knowledgeable body such as proposed? And now EdF are playing the same act of repeatedly threatening to pull out without more and more subsidies and price guarantees, over the Sizewell C project; and appear to have won, with the Government giving them a nice New Year present of £100 million pound to help, along with the right to start charging generation fees during build! Overly complex laws and regulations that choke off development, just look at the issues of hydro-electric projects, the sheer complexity and red tape has killed off perfectly feasible and desirable projects. Sudden kneejerk changes in legislation that is ill thought out, and damaging to industry, such as the accelerated drop off of the FiT programme. How many PV companies bit the dust after that? And surprisingly (Not) the carbon emissions UK wide are going up again.

CONCLUSIONS My proposed idea would meet the Government’s stated aim of reducing red tape, it would take the political element out of energy supply and leave the government to deal with other issues. The new body would be answerable to parliament, who would set up the mandated tasks, and leave the body to deliver these in the most cost-efficient manner deemed best by them, based on industry knowledge and with the express aim of ensuring that the consumer, both commercial and domestic, is provided with a secure, value for money and sustainable energy supply. It would allow the body to alter regulations as needed, without recourse to new legislation, making it quicker and ultimately cheaper. And it would allow them to use best industry practice and experience to achieve these goals, without interference from vested interests that would benefit financially from affecting governance. Is this politically shocking? Would it shake up the industry? Would it be a game changer? Would it deny the jobs for the boys culture that is prevalent in these quangos? I say yes to all these questions, but we need these changes and soon. https://www. linkedin.com/in/roger-low-92375465/


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